Hurdles for CH Energy sale

Tuesday

May 7, 2013 at 2:00 AM

POUGHKEEPSIE — CH Energy Group will continue to seek the New York State Public Service Commission's approval of its merger with Canadian company Fortis, even after two judges recommended against the deal.

Jessica DiNapoli

POUGHKEEPSIE — CH Energy Group will continue to seek the New York State Public Service Commission's approval of its merger with Canadian company Fortis, even after two judges recommended against the deal.

CH Energy Group, the parent of Central Hudson Gas & Electric Corp., and Fortis plan to file a document explaining their disagreements with the findings of the two administrative law judges, according to a statement from the company. That document must be filed by May 17.

Central Hudson still expects the deal to close by the end of next month. The commission's OK is the last the deal needs before it can be finalized.

Central Hudson did not answer specific questions Friday when the judges released the negative recommended decision — a document that shocked many observers of the case. CH Energy's common stock (NYSE: CHG) fell 39 cents Monday to close at $64.41. The acquisition agreement calls for Fortis to pay $65 per share.

The recommended decision states the deal's detriments outweigh its benefits. It goes on to say adding more financial incentives to the proposed $50 million may do little to make the deal better appeal to the public.

Fortis already agreed earlier this year to provide an additional $30 million in customer benefits after bargaining with the state.

Commission staff originally wanted to increase the public benefits to total about $95 million.

CH Energy spokesman John Maserjian said via email it's too early to say whether or not Fortis will add more financial incentives. There are no plans to withdraw the application from the state, he said.

"We very much see this as in our customers' best interest and plan to pursue the transaction," he said.

Spanish company Iberdrola had to significantly sweeten its original proposal when it acquired Energy East, the corporate parent of Rochester Gas and Electric and New York State Electric and Gas, which provides service in much of Sullivan County and pockets of Orange and Ulster counties.

The recommended decision in that case determined the deal was not in the public interest, according to a filing made by Citizens for Local Power and another group in the Fortis-Central Hudson case.

The state eventually approved the deal after Iberdrola agreed to double its investment in wind generation in the state to $200 million, the filing states.

The citizens group sees the judges' opinion as a win, according to a mass email from Manna Jo Greene, a member of the movement.

"Good time to buy stock in CH," she wrote in the email. "Ultimately, it's the shareholders that can best address the problems " and help CH to become a true service organization, which, as the distribution monopoly for this five-county region, it should be."